Piper: Apple's $3.9B component deal more evidence of Apple television

Apple's recent investment of $3.9 billion in components is likely for device displays ranging from the iPhone to the 27-inch iMac, and could signal Apple's intention to build a television set up to 50 inches in size, investment firm Piper Jaffray believes.

Analyst Gene Munster issued a note to investors on Thursday in which he said recent meetings in Asia — not with component suppliers — suggested that Apple has put its secret $3.9 billion investment toward securing displays for its range of products. He said Apple is believed to be investing in manufacturing facilities and securing supply for LCD displays.

The analyst also said that the investment could further signal Apple's intention to enter the television market. Munster has believed for years that Apple will introduce its own HDTV by the end of calendar year 2012 at the earliest.

"While Apple's commitment to the living room remains a 'hobby,' we continue to believe the company will enter the TV market with a full focus, as an all-in-one Apple television could move the needle when connected TVs proliferate," Munster said.

He estimates that 220 million flat panel TVs will be sold in 2012, and 48 percent of those — or 106 million — will be Internet-connected. He sees Apple potentially selling 1.4 million units in 2012, which would add $2.5 billion in revenue, or 2 percent, to the company's bottom line.

Munster sees the TV business for Apple growing to 4 billion in revenue in calendar year 2013, and 6 billion in 2014. He said Apple's component investment, believed to be in displays, could allow Apple to procure screen sizes up to 50 inches.

The analyst also noted that Apple has highlighted display technology in the marketing of its products, including the iPhone 4 Retina Display, and the 27-inch iMac LED backlit display. Advanced display technology, Munster said, has become an important part of Apple's business strategy.

Last month, during his company's quarterly earnings report, Apple Chief Operating Officer Tim Cook hinted at his company's long-term component supply contracts, and revealed that the company had invested $3.9 billion. Cook said he felt the secret deals were a "fantastic" use of his company's massive cash reserves, but declined to reveal what the investment might be, because the strategic move is "competitive" in nature.

Cook compared the investment to 2005, when Apple made a major investment by prepaying for flash memory. That long-term deal helped Apple secure enough NAND flash to place it in nearly all of Apple's devices, including the iPhone, iPad and new MacBook Air.

The idiocy of this is beyond my comprehension.. Jobs has as much interest getting into a highly mature, commoditized money losing business such as TV (Panasonic can't ake money, Pioneeer couldnt make money with the best product) as he has in putting his body through the rigors of climbing Mt Everest without oxygen.

Munster has been flogging this TV angle for a while now and it makes zero sense. If Apple really wanted to crush their margins, they'd sell the iPad at 1/2 its price.

Loving all things apple, this is a win for me. In addition, i'd like to see ALL household appliances designed and made by apple....total integration.....itoaster, macrowave, macstove, ifridge. Then I just sit on my throne and control them all from my ipad. I will change my name to iGod.

Apple has a TV. Its called Apple TV. Why would Apple enter an industry where prcies fall 30% a year and no one has pricing power. By simply improving its Apple TC box, it can access millions without the investment.

Apple could go the route of licensing an embedded Apple TV to the market leaders.

Don't believe any of the manufactures are making money in TVs.

On the other hand Munster may have some "inside" info from a supplier. On the third hand, he could have just dreamed it.

It actually does make sense as long as Apple can produce a better experience than the rest of the market. The interface on most TVs is horrible. By completely integrating the AppleTV interface natively into a TV, you have simplified the TV process. No longer do you need a bunch of separate components and cables, you just need to plug the TV into power.

3D TV is a niche market, and by all accounts completely sucks right now. If Apple were to get in the game, they would have opportunity to make something that actually stands out in the crowd. The question is whether they have the technology to do it.

In competing with the rest of the market on TVs, there is a huge range of price/quality available for TVs out there. Apple would obviously fall into the high end of pricing and offer a high end product. It's pretty amazing how fugly some of the TVs are that make it to market.